NEW YORK, Nov 19 (Reuters) - The Nasdaq slumped nearly 3 percent and the Dow and S&P fell more than 1 percent on Monday as investors pulled out of Apple and internet shares, while conflicting signals over the state of play between the United States and China on their trade dispute added to caution.

Shares of Apple Inc fell 3.5 percent after the Wall Street Journal reported the company had cut production orders in recent weeks for all three iPhone models launched in September.

The iPhone maker's stock is now down about 20 percent from a record high in October following a disappointing holiday quarter sales forecast and weak outlooks from several suppliers. The S&P 500 technology index, down 3.5 percent, led sector losses.

Other market leaders - including the 'FANG' stocks - also fell sharply, underscoring the view that their leadership was on shaky ground. Shares of Facebook were down 5.1 percent, Amazon.com was down 4.3 percent, Netflix was down 4.9 percent and Alphabet fell 3.4 percent.

Since the FANG outperformance run peaked on Aug. 30, the group has underperformed the S&P 500 by 16.25 percent. That is their worst underperformance since the first half of 2014 when they underperformed by around 20 percent.

"You're seeing that rotation away from tech. Certainly the indexes are much more growth-oriented because of the sheer size of those companies now, and they dominate the indexes. You're going to have more underperformance of the growth names," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Over the weekend, Asia-Pacific leaders meeting in Papua New Guinea failed to agree on a communique for the first time, with U.S.-China trade worries on the forefront.

U.S. Vice President Mike Pence said in a blunt speech on Saturday the United States will not back down from its trade dispute with China unless Beijing bows to U.S. demands, dampening Friday's trade optimism that was fueled by comments from President Donald Trump.

The Dow Jones Industrial Average fell 391.7 points, or 1.54 percent, to 25,021.52, the S&P 500 lost 41.9 points, or 1.53 percent, to 2,694.37 and the Nasdaq Composite dropped 195.74 points, or 2.7 percent, to 7,052.14.

Comments by New York Fed President John Williams on Monday that the U.S. central bank is pushing ahead with gradual rate-hike plans next month as it marches toward a more normal policy stance may have added pressure to stocks.

Some investors questioned whether the Fed will be able to continue raising interest rates, possibly harming growth.

Richard Clarida, the Fed's newly appointed vice chair, said on Friday that U.S. rates are nearing Fed estimates of a neutral rate, which "makes sense."

The Philadelphia SE Semiconductor index, which also includes some Apple suppliers, dropped 3.1 percent, extending losses from the previous session.

Trading volumes were thin in a holiday-shortened week ahead of Thanksgiving on Thursday and a shorter session on Friday which brings slight volatility to markets, traders said.

Declining issues outnumbered advancing ones on the NYSE by a 2.70-to-1 ratio; on Nasdaq, a 2.88-to-1 ratio favored decliners.

The S&P 500 posted 26 new 52-week highs and 17 new lows; the Nasdaq Composite recorded 16 new highs and 140 new lows. (Additional reporting by Medha Singh and Sruthi shankar in Bengaluru, Karen Brettell and Jennifer Ablan in New York; Editing by Arun Koyyur and James Dalgleish)